TV Channel Search and Commercial Breaks

We investigate time lapses that interrupt product consumption. Preeminent examples are commercial breaks during television or radio programming. We suggest that breaks facilitate consumers searching for alternatives. Specifically, when there is so much uncertainty that consumers are unclear about utility levels of different products, they engage in costly search to resolve the uncertainty. For TV programming, breaks lower the opportunity cost of search, allowing the consumer to sample alternative channels without further interrupting the viewing experience on her current channel. Using data from the Chinese TV market, we estimate a sequential search model to understand consumer TV channel choice behavior. The data contain a quasi natural experiment due to the Chinese government's policy change on commercial breaks. The natural experiment created exogenous variations in the data that enable the empirical identification of heterogeneous consumer preference and search cost. The data patterns support that viewers search alternatives during commercial breaks. Based on the estimates, we investigate how the timing of breaks affects TV channels' viewership, offering insights about how to strategically adjust the timing of breaks.

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